A legislative budget panel approved Governor Christie's plan to refinance up to $1.1 billion in state transportation debt Monday, a move Democrats said marks a stark reversal on borrowing policy by the Republican governor.

Christie, who is seeking a second term this year, promised in 2011 to wean the state off its heavy reliance on borrowing to pay for road, bridge and rail improvements by using more money from the annual state budget to fund long-term transportation projects.

But state revenues have been slow to rebound from the recession while costs for other needs like education and public employee pensions have gone up in recent years. Christie — who opposes raising taxes like the gas tax, the traditional source of funding for transportation spending — has had to find other ways to pay for the portion of his transportation plan that he originally said would come out of the annual budget.

The $32.9 billion spending plan the governor proposed last month does not include any of what he called “pay as you go” money out of the general fund for transportation spending. Instead, it uses federal funds and money raised from offering bond premiums to supplement borrowing.

And the latest Transportation Trust Fund bond refinancing approved Monday by the Legislature’s Joint Budget Oversight Committee is expected to save $50 million, in part by offering more bond premiums, which are essentially up front cash payments.

Senate Budget and Appropriations Committee Chair Paul Sarlo, D-Wood-Ridge, said the state will have to offer higher interest rates to investors to get the bond premiums. “Theoretically that’s not pay as you go because ultimately the taxpayers in the long run are going to be paying more,” he said.

“We’re creating more bond debt or indebtedness to the state of New Jersey by doing this,” Sarlo said. “The bond house, we’re using Goldman Sachs this time, they’re not giving us up front cash just because they’re nice guys.”

But Treasury officials who attended the meeting countered by saying the refinancing won’t lengthen the term of the bonds or the costs in later years. They also said the “true-interest costs” to the state could end up more favorable based on other factors.

“Your true interest costs at the end of the day, you’re better off,” said Steven Petrecca, assistant state treasurer. “That’s the way it’s viewed.”

Republicans on the panel came to Christie’s defense, saying New Jersey’s qualifications for bond premiums reflects well on the state and its bond rating.

“A bond premium is a good thing,” said Assembly Republican Budget Officer Declan O’Scanlon, R-Monmouth. “I don’t want to torture this into saying somehow a good thing is a bad thing.”

After the meeting, a spokesman for the state Department of Treasury said that what’s important is the Christie administration will still be using the same amount of borrowing — $849 million — in the new budget year that the governor originally proposed in his five-year transportation plan.

“The goal of pay-go is to limit the state’s reliance on debt financing to fund transportation projects,” spokesman William Quinn said. “The budget choices we have made for FY 2014 accomplish that goal.”